The recent High Court case of Warm Zones[1] is a useful reminder for employers of the best steps to take to protect confidential information.

Two former employees of ‘Warm Zones’, found themselves in the hot seat after evidence emerged that they had sought to disclose highly confidential information during their employment. Their former employer, sought a court order compelling them to hand over their personal computers for imaging and inspection.

Warm Zones’ concerns were understandable. Emails had come to light from other legal action indicating that the two former employees had offered the contents of their employer’s ‘unique proprietary database’ to a competitor. That database comprised details of more than 87,000 North Staffordshire householders. It represented many thousands of hours of work, and was the core of its market for the area.

Importantly, the contracts of employment for the former employees contained a clause preventing the disclosure of confidential information. The clause included restrictions on disclosing “client and/or customer information” such as the database in question.

The judge in the case ultimately granted a court order forcing the former employees to hand over their personal computers for inspection. The case is unusual, however, both in the strength of the evidence against the former employees and the value of the database. Not all employers will be so lucky with their evidence.

So what should employers do to protect their confidential information from misuse by employees and former employees?

Here are some points to consider:

Proving the direct misuse of confidential information is normally difficult. Employees can often hide the evidence of such misuse fairly easily. Restrictive covenantsare normally an easier way for an employer to protect its sensitive information post-employment, by preventing the opportunity for misuse. Employers should consider putting such restrictions in the employment contracts of their key employees. Such restrictions can prevent those employees working for direct competitors for a limited period, and also from recruiting key customers and former colleagues.

In the absence of an express clause protecting confidential information the courts will only imply that the employer’s ‘trade secrets’ are protected and nothing more. Ensuring there are express contractual provisions setting out what is to be regarded as confidential and preventing its disclosure can clearly enhance the employer’s protection.

Consider how widely access rights are granted. Should this be restricted through the careful use of IT?

Consider ‘locking in’ unique evidence of misuse; dummy contact entries in databases (which re-route to the employer) are sometimes used to provide early warning of the misuse of data from a database.